HDB Financial Services, one of India's leading diversified NBFCs, is set to launch its much-anticipated ₹12,500 Crore Initial Public Offering (IPO) on June 25, 2025. Categorized as an Upper Layer NBFC (NBFC-UL) by the Reserve Bank of India (RBI), the company is a wholly owned subsidiary of HDFC Bank Limited, and offers a broad portfolio of retail-focused lending products to a diverse customer base across India.

The IPO comprises a Book Built Issue of ₹12,500 Crores, including a Fresh Issue of 3.37 Crore shares aggregating to ₹2,500 Crores and an Offer for Sale (OFS) of 13.51 Crore shares totalling ₹10,000 Crores. The issue opens for subscription from June 25 to June 27, 2025. The allotment of shares is expected by June 30, 2025, with the tentative listing on both BSE and NSE scheduled for July 2, 2025.

The IPO price band is fixed between ₹700 and ₹740 per equity share, with a lot size of 20 shares per lot. This means a minimum investment of ₹14,800 for retail investors, while HNIs need to apply for a minimum of 14 lots (280 shares) with an investment of ₹2,07,200. At the upper end of the price band, the company’s market capitalization stands at approximately ₹61,387.93 Crores.

Company Profile and Business Model

HDB Financial Services operates with a customer-centric, omni-channel distribution network, providing an extensive range of loan products including:

• Enterprise Lending

• Consumer Finance

• Asset Finance

• Secured and Unsecured Loans

The company's tech-enabled infrastructure and pan-India presence help it cater to both urban and semi-urban markets efficiently. It is ranked among the top non-banking financial companies in India by Total Gross Loan Book, according to the CRISIL Report.

Its categorization as an NBFC-UL mandates it to follow stricter regulatory compliance, indicating systemic importance within the financial ecosystem.

Financial Performance

The company has shown consistent revenue growth, though net profits have seen some variability:

Revenue from Operations (₹ in Million):

• FY23: ₹1,24,028.80

• FY24: ₹1,41,711.20

• FY25: ₹1,63,002.80

EBITDA (₹ in Million):

• FY23: ₹62,511.60

• FY24: ₹83,141.30

• FY25: ₹95,123.70

Profit After Tax (₹ in Million):

• FY23: ₹19,593.50

• FY24: ₹24,608.04

• FY25: ₹21,759.20

These figures suggest that while revenues and operating profits are increasing, profitability has seen minor fluctuations, possibly due to provisioning and changing interest dynamics.

Valuation Metrics

The valuation of the IPO has raised some concerns among analysts:

• Pre-Issue EPS (FY24): ₹27.32

• Post-Issue EPS (FY24): ₹26.23

• Pre-Issue P/E Ratio: 27.08x

• Post-Issue P/E Ratio: 28.21x

• Industry Average P/E Ratio: 23x

This indicates the IPO is fully priced with a modest premium to the industry average. Additionally, Return on Net Worth (RoNW) and Return on Average Equity (ROAE) both stand at 14.72%, showcasing decent, though not outstanding, profitability returns compared to peers.

Grey Market Premium (GMP)

The GMP for the HDB Financial Services IPO is currently ₹0, implying no premium in the grey market. This usually reflects lack of strong retail and institutional demand, at least in the unregulated market space. While GMP is not an official benchmark, it offers directional cues on investor sentiment.

Investors must remember that GMP is based on unofficial, unregulated trading, and thus should not be the sole basis of investment decisions.

IPO Objectives

The net proceeds from the fresh issue will be primarily used to:

1. Augment Tier I Capital to support future capital requirements across:

   • Enterprise Lending

   • Asset Finance

   • Consumer Finance

2. Support business growth under regulatory capital adequacy norms.

This capital infusion is expected to strengthen the company’s balance sheet, support expansion, and improve lending capacity in the near term.

Lead Managers and Registrar

A total of twelve book running lead managers (BRLMs) have been appointed to manage the issue, including:

• JM Financial

• IIFL Securities

• Nuvama Wealth

• BNP Paribas

• BofA Securities India

• Goldman Sachs India

• HSBC Securities

• Jefferies India

• Morgan Stanley India

• Motilal Oswal

• Nomura

• UBS India

The registrar to the issue is MUFG Intime India Private Limited, responsible for allotment and refund-related operations.

Allotment & Listing Timeline

• IPO Opens: June 25, 2025

• IPO Closes: June 27, 2025

• Allotment Date: June 30, 2025

• Listing Date: July 2, 2025 (tentative)

Investors can check their allotment status on the registrar’s website by entering PAN, DP ID, or application number once results are declared.

Expert Review & Recommendation

The HDB Financial Services IPO comes from a reputed promoter (HDFC Bank) and shows a track record of stable operations and consistent revenue growth. However, valuation appears stretched, and the flat GMP indicates a lack of strong short-term sentiment.

Given its premium pricing and lack of listing gains visibility, experts recommend investors avoid the IPO purely for listing gains. It may be more suitable for long-term investors confident in the NBFC space and the credibility of the HDFC group.

Disclaimer:
This article is intended for educational and informational purposes only and should not be construed as financial advice or a solicitation. Investing in the stock market involves risk, and readers should consult professional advisors before making any investment decision. The views expressed here are based on publicly available information and current market conditions. Investors must read the Red Herring Prospectus (RHP) and all associated documentation carefully before subscribing to the IPO.

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